First-Time Buyers Turn to 'Marathon Mortgages' as Affordability Becomes a Challenge

The Advent of Marathon Mortgages

HSBC is set to introduce a new ‘marathon’ 40-year mortgage, targeting customers who may find the monthly payments of shorter deals challenging. This mortgage term will be available for both residential and buy-to-let mortgages, initially through brokers before becoming directly available from HSBC on 13 September.

Impact on the Housing Market

Andrew Matson, Head of Mortgages at HSBC UK, sees this move as a positive step towards helping more people step onto the property ladder. It is expected to make mortgages more manageable and homeownership a reality for more customers. This could potentially have a significant impact on the housing market, particularly for those obtaining planning permission for construction in London, England, UK.

The Rising Popularity of Long-Term Mortgages

Long-term mortgages, or ‘marathon mortgages’, are becoming increasingly popular as rising interest rates make the typical 20- or 25-year deals less affordable for prospective buyers, particularly first-time buyers seeking to escape the rental market. However, while these mortgages have lower monthly payments, the total amount repaid over the term is significantly higher due to the compounding effects of interest.

The Shift in Mortgage Trends

Smaller lenders have previously offered 40-year mortgages, but HSBC’s announcement may mark a turning point in the acceptance of ultra-long mortgages in the mainstream. Lewis Shaw, Owner and Mortgage Expert at Shaw Financial Services, feels this move brings HSBC in line with most of the mortgage market and shows there is a market appetite for longer mortgages.

The Future of Mortgages

Elliott Benson, owner and mortgage broker at Sett Mortgages, believes that HSBC tends to offer some of the most affordable options for first-time buyers. Therefore, this deal could be especially attractive to those seeking a longer-term mortgage. In 2023, 19 per cent of first-time buyers took out a mortgage of 35 years or more, a significant increase from just two per cent in 2005.